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iguesswhatevs OP t1_jad3qfe wrote

Reply to comment by Werewolfdad in Just got my check from former employer closing my 401k account by iguesswhatevs

What do you mean deposit it should be? I can deposit, say, $1000 if there’s only $790 on the check.

Since I already paid taxes on it, what if I just put into my personal Roth IRA and select 2022 roll over?

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Werewolfdad t1_jad3var wrote

> What do you mean deposit it should be? I can deposit, say, $1000 if there’s only $790 on the check

You write a check for $1000 to the IRA custodian as an indirect rollover

>Since I already paid taxes on it, what if I just put into my personal Roth IRA and select 2022 roll over?

Then you still pay penalties on the amount withheld

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iguesswhatevs OP t1_jad6cn6 wrote

I’m so confused. So you’re saying that, say I have $1000 and I pay $210 or 21% in federal taxes, I still have MORE penalties to pay?

Becuase my check basically shows the $790. And if I already paid my taxes then what else do I still owe?

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Werewolfdad t1_jad6hsd wrote

Yes. If you don't rollover/convert the full balance ($1000), you pay penalties on whatever amount was withheld. In this case, its $21, but still, that's $21 you don't need to give away

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iguesswhatevs OP t1_jad71oc wrote

Wait so $21 on top of the $210 or a total of $231 and where did you get that number?

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Werewolfdad t1_jad76nq wrote

Depends on your income. You could owe more than 21% in just taxes depending on your state. But if you don't "make up" the $210 in your rollover, you will owe a penalty on that $210

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Redtm17 t1_jadaf9j wrote

I had this same thing happen to me and it sucks, but you need to come up with your own money to make everything whole from a tax deferred standpoint. It would all work out in the end, but it's an annoying cash flow issue. There were some articles online that explained it thoroughly.

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